La Frontera, an Arizona behavioral health center, told the 10th Circuit Court of Appeals on May 13 that UnitedHealthcare colluded with New Mexico to defraud the federal government out of $1.6 billion, seeking to revive its lawsuit against the insurance giant. La Frontera was asked to take over multiple New Mexico behavioral health facilities after United accused 90% of the state’s providers of fraud.
United first contracted with New Mexico in 2009 to process behavioral health claims, promising new claims processing, data, and fraud detection systems. The contract ended in 2013 after United lost money throughout the arrangement. La Frontera accused United in a 2015 lawsuit of colluding with the state to cover up its failures by accusing 15 providers of noncompliance and fraud. United retained up to 40% of state funds recouped from terminated providers. La Frontera then contracted to replace some providers, but claims it failed to receive payment on more than 30,000 separate claims, with United retaining nearly $4 million.
In August 2025, a federal judge dismissed one count of fraudulent inducement under the Federal Claims Act for exceeding the statute of limitations and granted summary judgment to United on remaining counts. La Frontera’s attorney Bob Neel argued the judge analyzed the wrong statute. During oral arguments, U.S. Circuit Judge Joel Carson asked UnitedHealthcare’s attorney Jessica Ellsworth: “When you look at the very poor execution of the project later, couldn’t the very fact that the start and the execution was so bad mean that no reasonable executive could have believed that they were capable of handling this project?” Ellsworth countered that breach of contract and fraudulent inducement are different.
Neel argued that since the contract involved federal Medicaid dollars, a federal fraudulent inducement claim should stand regardless of when the lawsuit was filed. He also noted United continued to falsely adjudicate claims throughout the contract. La Frontera pulled out of New Mexico in 2015. The three-judge panel did not indicate when it would rule.
This article is an AI-assisted summary. All facts and figures are drawn from the original report: http://arizonaherald.com/news/279049180/unitedhealthcare-fends-off-billion-dollar-fraud-claims-at-10th-circuit